Political Development

• One of the enduring questions in political development is how to create state institutions that are able to impose policy solutions on powerful economic actors.

• A lot of social science research focuses on “late-developing states”, some of which have managed to achieve high levels of state capacity and economic growth (Evans 1989; Waldner 1999).

• Why is there so much variation in the relationship between states and business elites in the developing world (Markus 2015; Frye 2017; Kang 2002; Kohli 2004), and are there plausible interventions that can change these relationships in a way that promotes inclusive development?

A Tunisian Story

What Are Political Connections For?

• We know that sometimes political connections hurt economic growth by encouraging corruption (Imed Trabelsi).

• In other states (Japan, South Korea), close business-government relationships happen in tandem with growth.

• What are the long-term selection dynamics that underpin who becomes a successful businessperson in places where connections are only available to elites?

Research Question

• Access to connections may shape people’s careers in ways we do not understand very well.

• What kind of people choose to become entrepreneurs in environments where political connections are important?

• Can we provide access to connections to people without them, and would this change their career decisions?

Case Selection

• We look at young people in Senegal and Tunisia who belong to the population of would-be entrepreneurs.

• We focus on young people because:

  • Their connections are largely fixed by family relationships.

  • Their careers are malleable.

  • We can track them over time to see how they make decisions about careers.

Case Selection

• Senegal and Tunisia are rated as top 10 countries in the world for interest in entrepreneurship (Global Economic Monitor).

• Both measure poorly on indices of corruption in government (Senegal #72/180 and Tunisia #85/180).

• Both are former French colonies with heavy-handed bureaucratic regulation that can make connections very important to ease red tape.

Hypotheses

Hypothesis 1: An increase in a young entrepreneur’s political connections should cause an improved self-assessment of the possibility of engaging in entrepreneurship.

Hypothesis 2: Increased interactions with government officials will result in higher self-reported political connections among potential entrepreneurs.

Multi-Stage Research Design

• Stage 1: Recruit quasi-representative sample of young people (ages 18 - 30) via Facebook ads. Screen for interest in entrepreneurship or government careers.

• Then invite this sample to a second survey with a larger mobile credit (~$10 USD).

• Second survey contains a conjoint experiment (4 tasks) compares two hypothetical entrepreneurs and includes connections (father’s profession, membership in ruling party) as attributes.

• In total, we collected 609 responses in Senegal and 501 in Tunisia (N for conjoint is 8,156).

Conjoint Example

Multi-Stage Research Design

• Stage 2: Run in-person field experiment by inviting random sample of survey respondents to entrepreneurship training.

  • Respondents given incentive to cover travel costs.

  • We hired entrepreneurs to design and run workshops in both Tunisia and Senegal.

    • Government officials from business development agencies invited to present.

• In total 83 participants; all others are controls.

Multi-Stage Research Design

Outcomes:

1. How likely are you, alone or with others, to start a new business, including any type of self-employment, within the next three years? (Ordinal response)
2. Over the past year, did you, alone or with others, try to start a new business? (Yes/No)

Multi-Stage Research Design

• Finally, we re-contacted respondents 1 year (Tunisia) and 6 months (Senegal) after completion of the training. All respondents filled out the complete initial survey instrument.

• Recontact rates were 57% for Tunisia and 78% for Senegal (attrition generally occurred in the control group).

Inference Problem

Types of Political Connections

Examining Political Connection Relationships

Do Connections Matter for Entrepreneurship?

Total Effect of Treatment on Entrepreneurship

Indirect Effect of the Treatment Via Connections

Mechanism: Interactions with Officials

Long-term Effects on Owning Businesses

Did We Convince Them Connections Don’t Matter?

Conclusion

• It does seem that we can manipulate perceived connections through meetings with government officials.

• Increasing connections does seem to contribute to improved odds of perceived interest in entrepreneurship–and probably success as well.

• Effects of the treatment on interest/attempts last over the long-term, but not the political connections component.

Future Research

• We are applying for grant funding to implement the longitudinal survey + field experiment in Ghana.

  • Looking at alternative treatments for political connections—internships or all-day workshops with government officials.

  • Can we use WhatsApp groups as a way to increase treatment scale?

• We continue to implement longitudinal surveys in Tunisia and Senegal.

  • In Senegal we are looking at long-term effects of upcoming oil/gas discoveries in 2024.

Research to Date

Connections and Income

Connections and Public Sector Interest

Change in Political Connections Over Time

Indirect Effect of the Treatment Via Connections (Details)

Long-term Effects (Details)